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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM__________ TO__________
------------------------
COMMISSION FILE NUMBER 1-5842
------------------------
BOWNE & CO., INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
345 HUDSON STREET
NEW YORK, NEW YORK
(Address of principal executive offices)
13-2618477
(IRS Employer Identification Number)
10014
(Zip code)
(212) 924-5500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock was 18,142,853 shares of common stock, par value $.01, outstanding as at
June 12, 1997.
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FINANCIAL STATEMENTS
BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30,
1997 OCTOBER 31,
(UNAUDITED) 1996
------------ ------------
(000'S OMITTED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 11,653 $ 31,879
Marketable securities............................................................... 4,390 4,618
Trade accounts receivable, less allowance for doubtful accounts of $12,424,000 and
$8,763,000......................................................................... 193,323 156,817
Inventories......................................................................... 51,896 33,509
Prepaid expenses and other current assets........................................... 12,424 8,080
------------ ------------
Total current assets.................................................... 273,686 234,903
Property, plant and equipment, less depreciation and amortization of $124,645,000 and
$110,804,000.......................................................................... 140,974 128,583
Excess cost of subsidiaries over net assets at date of acquisition...................... 57,032 13,867
Other assets............................................................................ 8,998 8,469
------------ ------------
Totals.............................................................. $480,690 $385,822
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt................................. $ 14,919 $ 2,753
Accounts payable.................................................................... 39,157 21,317
Accrued liabilities................................................................. 77,671 63,471
------------ ------------
Total current liabilities............................................... 131,747 87,541
Long-term debt -- net of current portion................................................ 4,193 2,495
Deferred employee compensation and benefits............................................. 16,048 15,052
------------ ------------
Total liabilities....................................................... 151,988 105,088
------------ ------------
Stockholders' equity:
Common stock, par value $.01, issued 19,456,880 shares in 1997 and 19,365,605 shares
in 1996............................................................................ 195 194
Additional paid-in capital.......................................................... 34,429 28,090
Retained earnings................................................................... 310,362 271,195
Unrealized gains on marketable securities........................................... 723 747
Foreign currency translation adjustment............................................. (1,984) (882)
Treasury stock, at cost, 1,333,227 shares in 1997 and 1,677,184 in 1996............. (15,023) (18,610)
------------ ------------
Total stockholders' equity.............................................. 328,702 280,734
------------ ------------
Totals.............................................................. $480,690 $385,822
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</TABLE>
1
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30,
(UNAUDITED)
------------------------
(000'S OMITTED)
1997 1996*
-------- --------
<S> <C> <C>
Net sales................................................................................ $174,693 $136,396
Expenses:
Cost of sales........................................................................ 93,663 73,701
Selling and administrative........................................................... 50,344 36,654
Depreciation and amortization........................................................ 6,723 4,938
Interest............................................................................. 303 245
-------- --------
151,033 115,538
-------- --------
Operating income......................................................................... 23,660 20,858
Other income............................................................................. 859 1,518
-------- --------
Income before income taxes............................................................... 24,519 22,376
-------- --------
Income taxes:
State and local...................................................................... 1,959 2,067
Federal.............................................................................. 7,499 7,053
Foreign.............................................................................. 1,195 742
-------- --------
10,653 9,862
-------- --------
Net income............................................................................... $ 13,866 $ 12,514
======== ========
Net income per share..................................................................... $.76 $.71
======== ========
Dividends per share...................................................................... $.09 $.09
======== ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
(UNAUDITED)
------------------------
(000'S OMITTED)
1997 1996*
-------- --------
<S> <C> <C>
Net sales................................................................................ $313,453 $227,124
Expenses:
Cost of sales........................................................................ 170,704 129,498
Selling and administrative........................................................... 91,107 61,137
Depreciation and amortization........................................................ 13,603 9,802
Interest............................................................................. 472 439
-------- --------
275,886 200,876
-------- --------
Operating income......................................................................... 37,567 26,248
Gain on sale of subsidiary............................................................... 35,273 --
Other income............................................................................. 1,319 2,440
-------- --------
Income before income taxes............................................................... 74,159 28,688
-------- --------
Income taxes:
State and local...................................................................... 8,264 2,683
Federal.............................................................................. 22,148 9,360
Foreign.............................................................................. 1,336 538
-------- --------
31,748 12,581
-------- --------
Net income............................................................................... $ 42,411 $ 16,107
======== ========
Net income per share..................................................................... $2.37 $.92
======== ========
Dividends per share...................................................................... $.18 $.18
======== ========
</TABLE>
- ---------------
* Certain amounts have been reclassified to conform to the current year
presentation.
2
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BOWNE & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997
(UNAUDITED)
----------------
(000'S OMITTED)
<S> <C>
Retained earnings at beginning of period........................................ $271,195
Net income...................................................................... 42,411
Dividends....................................................................... (3,244)
--------
Retained earnings at end of period.............................................. $310,362
=================
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
(UNAUDITED)
---------------------------
(000'S OMITTED)
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income....................................................................... $ 42,411 $ 16,107
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................ 13,603 9,802
Provision for deferred employee compensation................................. 1,089 826
Gain on sale of subsidiary................................................... (35,273) --
Changes in other current assets and liabilities, net of non-cash
transactions................................................................. (35,284) (30,851)
-------- --------
Net cash used in operating activities............................................ (13,454) (4,116)
-------- --------
Cash flows from investing activities:
Proceeds from sale of subsidiary................................................. 36,679 --
Acquisitions of businesses, net of cash acquired................................. (30,871) --
Purchase of marketable securities or other investments........................... (1,128) (2,581)
Proceeds from the sale of marketable securities and other investments............ 1,243 5,788
Purchase of real estate, equipment and leasehold improvements.................... (20,569) (18,289)
-------- --------
Net cash used in investing activities............................................ (14,646) (15,082)
-------- --------
Cash flows from financing activities:
Proceeds from borrowings......................................................... 11,678 907
Payment of debt.................................................................. (1,659) (132)
Proceeds from stock options exercised............................................ 1,464 2,307
Purchase of treasury stock....................................................... (423) --
Payment of dividends............................................................. (3,244) (3,162)
-------- --------
Net cash provided by (used in) financing activities.................................. 7,816 (80)
-------- --------
Effect of exchange rate on cash...................................................... 58 30
-------- --------
Decrease in cash and cash equivalents................................................ $(20,226) $(19,248)
======== ========
</TABLE>
3
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BOWNE & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. The financial information included herein as at April 30, 1997 and
for the three and six months ended April 30, 1997 and 1996 is unaudited and, in
the opinion of the Company, reflects all adjustments necessary for a fair
presentation of the financial position as of those dates and the results of
operations for those periods. The information in the Condensed Consolidated
Balance Sheet as at October 31, 1996 was derived from the Company's audited
annual report for 1996.
NOTE 2. Inventories of $51,896,000 in 1997 include raw materials of
$6,069,000 and work in process of $45,827,000. At October 31, 1996, inventories
of $33,509,000 included raw materials of $5,583,000 and work in process of
$27,926,000.
NOTE 3. Net income per share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period. The
weighted average number of shares was 18,074,366 (three months) and 17,923,787
(six months) in 1997, and 17,606,959 (three months) and 17,551,137 (six months)
in 1996.
NOTE 4. The Company classifies its investment in marketable securities as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of stockholders' equity. At April 30, 1997, the fair value of
marketable securities exceeded cost by $1,268,000. At October 31, 1996, the fair
value of marketable securities exceeded cost by $1,311,000. The net unrealized
gains, after deferred taxes, were $723,000 and $747,000 at April 30, 1997 and
October 31, 1996, respectively.
NOTE 5. During the second quarter of 1997, the Company acquired the
companies described below, which were accounted for by the purchase method of
accounting:
The Company made a number of non-U.S. acquisitions for cash related to its
localization business. In March, the Company purchased 100% of I&G COM, a French
based company, and affiliates, 100% of ME&TA Software Localization Company S.L.,
based in Spain, 100% of Pacifitech, a Japanese based company, and 100% of GECAP
Localization Technologies, a German based company, and its interests in
affiliates. The goodwill recorded as a result of these acquisitions was
approximately $29 million. The total purchase price for these companies was
approximately $27 million including acquisition costs. In addition the Company
has entered into an agreement to purchase ME&TA, S.L., based in Spain, for
approximately $5 million.
Also, the Company purchased two U.S. companies for a combination of cash
and the Company's common stock to help grow its internally developed document
outsourcing business which started in late 1996. The companies purchased were
Imagineer, Inc., a Phoenix based company, and Internet Factory, Inc., a Detroit
based company. The goodwill recorded as a result of these acquisitions was
approximately $6 million. The purchase price for these companies, including
acquisition costs, was approximately $6 million. The shares issued under the
purchase agreements were 88,888 and 10,000 for Imagineer and Internet Factory,
respectively. For Internet Factory, the purchase agreement requires that an
additional 10,000 shares will be issued in both January 1998, and 1999.
Goodwill related to the above acquisitions is being amortized over 40
years. The revenues and results of these acquisitions are not expected to have a
significant effect on reported earnings for 1997.
NOTE 6. In March, the Company entered into an agreement for a $25,000,000
unsecured short-term line of credit to be used for general corporate purposes.
This agreement expires on July 1, 1997. At April 30, 1997 the Company had
borrowed and had outstanding $10,000,000. The weighted average interest rate was
6.3%.
4
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position continues to be strong with excellent
liquidity. On April 30, 1997, the Company had a working capital ratio of 2.08 to
1 and working capital of $141,939,000.
During March, the Company completed the cash purchases of four localization
companies with three located in Europe and the other in Japan. In addition, two
smaller entities were acquired with a combination of cash and common stock of
the Company. The cash generated from the sale of a subsidiary, Baseline
Financial Services, Inc., during January plus the cash on hand was used to fund
these acquisitions. It is expected that the cash generated from operations,
working capital and the Company's existing and available borrowing capacity will
be sufficient to continue funding these new businesses during the integration
process, finance future acquisitions, provide for the payment of dividends and
finance capital expenditures.
CASH FLOWS
The Company had net cash used in operating activities of $13,454,000 and
$4,116,000 for the six months ended April 30, 1997 and 1996, respectively.
Net cash used in investing activities was $14,646,000 and $15,082,000 for
the six months ended April 30, 1997 and 1996, respectively. This included
expenditures related to the expansion of facilities and continued investments in
new technologies. In 1997, the Company derived $36,679,000 from the sale of a
subsidiary, which was principally used to fund the cash expenditures for new
businesses of $30,871,000.
Cash provided by (used in) financing activities was $7,816,000 and
$(80,000) for the six months ended April 30, 1997 and 1996, respectively. In
1997, the Company borrowed $10,000,000 from a short-term line of credit
facility.
FOREIGN EXCHANGE
The Company derives a portion of its revenues from various foreign sources.
The Company has not experienced significant gains or losses as a result of
fluctuations in the exchange rates of the related foreign currencies. To date,
the Company has not used foreign currency hedging instruments to reduce its
exposure to foreign exchange fluctuations.
RESULTS OF OPERATIONS AND OUTLOOK
The Company primarily provides printing and other related services. The
Company recently expanded its lines of business to include information
management, global document creation and dissemination, and internet services.
Some of the revenues related to the printing business are affected by the
cylical conditions of the capital markets.
As mentioned above, during the second quarter the Company acquired three
localization companies based in Europe and one in Japan. These acquisitions,
along with the localization company purchased during the first quarter of fiscal
1997, will provide the Company with a major presence in the localization market.
Microsoft, Inc. is expected to be the largest customer of the localization
business. In addition, in late 1996 the Company started a new business unit to
provide document outsourcing, to which were added two small business units. The
revenues associated with the localization business and the newly formed
outsourcing units traditionally have lower margins than those of the print
operations when the capital markets are robust. However, these units are less
cyclical in nature and are expected to have steadier margins. During the fiscal
quarter ended April 30, 1997 the sales related to these acquisitions and the new
business unit amounted to 6.8% of sales and these businesses had a minor
negative impact on the overall operations to date. The Company anticipates, for
the near future, that these businesses will continue to have a minor negative
short-term impact on overall margins and profitability.
5
<PAGE> 7
QUARTER ENDED APRIL 30, 1997 COMPARED TO QUARTER ENDED APRIL 30, 1996
Sales increased by $38,297,000, or 28%, to $174,693,000. The increase was
primarily attributable to higher levels of demand for transactional printing
services and continued growth in non-transactional printing services.
Secondarily, sales increased as a result of the acquisitions completed during
the year. The overall gross margin remained relatively constant at 46%.
Other revenue decreased $659,000 due to lower levels of capital gains on
the sale of marketable securities.
Selling and administrative expenses increased $13,690,000 to $50,344,000.
This increase was due in part to the variable costs associated with sales and
profitability and to a lesser extent, to the selling and administrative costs
related to the new businesses.
Depreciation and amortization increased $1,785,000, or 36%, primarily due
to the expansion of facilities and the acquisition of equipment and, to a lesser
extent, the depreciation and amortization related to new businesses.
Interest expense remained relatively unchanged.
The effective overall tax rate decreased slightly from 44% to 43%.
As a result of the foregoing, income before income taxes was $24,519,000
and net income increased 11% to $13,866,000.
SIX MONTHS ENDED APRIL 30, 1997 COMPARED TO SIX MONTHS ENDED APRIL 30, 1996
Sales increased 38%, or $86,329,000, to $315,453,000 as a result of higher
levels of demand for transactional printing services, which generated higher
margins. In addition, sales increased as a result of the acquisitions completed
during the year. The overall increase in sales, combined with an increase in the
gross margin percentage from 43% to 46%, contributed to an increase in gross
margin of $45,123,000.
Other revenue, consisting primarily of investment income, decreased
$1,121,000 due to lower levels of capital gains on the sale of marketable
securities.
Selling and administrative expenses increased $29,970,000 to $91,107,000,
due to increases in expenses related to sales and profitability and, to a lesser
extent, to the selling and administrative costs related to the new businesses.
Depreciation and amortization increased $3,801,000 primarily due to
expansion of facilities and the acquisition of equipment and, to a lesser
extent, the depreciation and amortization related to the new businesses.
Interest expense remained relatively unchanged.
The effective overall income tax rate decreased slightly from 44% to 43%.
As a result of the foregoing, net income, after deducting the net gain of
$20,005,000 from the sale of Baseline Financial Services, Inc., was $22,406,000,
an increase of 39% compared with $16,107,000 from the prior year period.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BOWNE & CO., INC.
<TABLE>
<S> <C>
Date: June 16, 1997 ROBERT M. JOHNSON
-----------------------------------------------
ROBERT M. JOHNSON
(CHAIRMAN OF THE BOARD (AND DIRECTOR) AND
CHIEF EXECUTIVE OFFICER)
Date: June 16, 1997 DENISE K. FLETCHER
-----------------------------------------------
DENISE K. FLETCHER
(VICE PRESIDENT, CHIEF FINANCIAL OFFICER)
</TABLE>
7
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EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
3.1 Restated Certificate of Incorporation
27 Financial Data Schedule
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
BOWNE & CO., INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
OF THE STATE OF NEW YORK
REFLECTING ALL AMENDMENTS THROUGH JANUARY 30, 1997
First: The name of the corporation is BOWNE & CO., INC.
Second: The Certificate of Incorporation of the corporation was filed by
the Department of State on the eleventh day of June 1968.
Third: The text of the Certificate of Incorporation of the corporation is
hereby restated without further amendment or change to read as follows:
------------------------------------
FIRST: The name of the corporation is "Bowne & Co., Inc."
SECOND: The corporation is formed for the following purpose or purposes:
To engage in the business of printing, lithographing, stereotyping,
electrotyping, photographic printing, photolithographing, engraving,
die-sinking, blank book manufacturing, book binding, publishing and
stationery, including the printing or other reproduction of books,
pamphlets, periodicals, newspapers, posters, circulars, envelopes, tickets,
bill and letterheads, cards, tags, labels, and commercial, financial and
legal blanks, forms, instruments and documents of every kind and
descriptions; and to manufacture, purchase, sell, trade, export, import,
distribute or otherwise deal with stationery, stationery supplies, printing
and printed matter, materials and supplies, forms, registers, records,
books, and all such other goods, wares, merchandise, business and
activities as may be related to or connected with any of the foregoing
activities or businesses.
To engage, directly or indirectly, as principal or as agent, in any
manufacturing, service, wholesaling, retailing, brokerage or other
business, activity or course of conduct not prohibited by law, and in
furtherance of the foregoing purposes to exercise all powers now or
hereafter granted or permitted by law, including the powers specified in
the laws under which the corporation is organized and any and all laws
hereafter enacted amendatory thereof or supplemental thereto.
THIRD: The office of the corporation is to be located in the City, County
and State of New York.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is sixty-one million (61,000,000), sixty million shares of
which shall be Common Stock of the par value of $.01 per share and one million
shares of which shall be Preferred Stock of the par value of $.01 per share. The
relative rights, preferences and limitations of the shares of each class of
stock are as follows:
Each holder of Common Stock shall be entitled to one vote for each
share of such stock held by him. Each holder of shares of any series of
Preferred Stock shall be entitled to such voting rights, if any, as shall
be fixed by the Board of Directors of the Company at the time of the
issuance of such series as prescribed by law.
Subject to the provisions of this Article, the Board of Directors is
hereby expressly authorized to issue in series or otherwise the shares of
Preferred Stock, and to fix from time to time before issuance the number of
shares to be included in any series and the terms, limitations, relative
rights and preferences of all shares of such series. The authority of the
Board of Directors with respect to each series shall include,
<PAGE> 2
without limitation thereto, the authority to determine any or all of the
following and the shares of each series may vary from the shares of any
other series in the following respects:
(a) The number of shares constituting such series and the
designation thereof to distinguish the shares of such series from the
shares of all other series;
(b) The annual dividend rate on the shares of such series and
whether such dividends shall be cumulative, and, if cumulative, the date
from which dividends shall be cumulative;
(c) The redemption price or prices for shares of such series, if
redeemable, and the terms and conditions of such redemption;
(d) The preference, if any, of shares of such series in the event
of any voluntary or involuntary liquidation, dissolution or winding up
of the company;
(e) The voting rights, if any, of shares of such series in addition
to the voting rights prescribed by law, and the terms of exercise of
such voting rights;
(f) The right, if any, of shares of such series to be converted
into shares of any other series or class and the terms and conditions of
such conversion;
(g) The sinking fund provisions, if any, for the redemption or
repurchase of shares of such series; and
(h) Any other terms, limitations and relative rights and
preferences of such series, to the extent permitted by law.
Convertible shares surrendered upon conversion, or redeemable shares
which are redeemed, purchased or otherwise reacquired by the Company, shall
be held as treasury shares until reissued, retired or cancelled by action
of the Board of Directors.
There is established as a series of the Preferred Stock a series designated
"Convertible Preferred Stock, Series A" (hereinafter called "Series A Stock"),
which series shall consist of a total of 46,000 shares. The terms, limitations
and relative rights and preferences of the Series A Stock shall be as follows:
1. Out of the assets of the corporation which are by law available for
the payment of dividends, the holders of Series A Stock shall be entitled
to receive, in preference to the holders of Common Stock, as and when
declared by the Board of Directors, (a) prior to the sixth anniversary of
the date of first issuance of Series A Stock (herein sometimes called the
"Date of Issuance"), dividends per share equal to dividends paid on the
Common Stock, but not exceeding 24c per share in any twelve month period,
and (b) for quarterly periods ending after the sixth anniversary of the
Date of Issuance, at, but not exceeding, the rate of 6% of the redemption
value (as defined hereafter) per annum per share provided that the dividend
for each such quarterly period shall be payable (subject to declaration) in
the quarter following the quarter to which such payment relates. Dividends
shall accrue on shares of Series A Stock from the Date of Issuance thereof,
and shall be cumulative so that full dividends upon the outstanding Series
A Stock at the rate fixed therefor shall be paid or set aside for payment
for all prior completed quarterly periods before any dividends shall be
declared and paid or set aside for payment upon the Common Stock, and
before any assets which are by law available for the payment of dividends
shall be paid or set aside for the purchase or redemption of Series A Stock
or for the purchase of any shares of Common Stock. The holders of Series A
Stock shall be entitled to no dividends except as aforesaid, nor shall they
be entitled to any interest on any dividends which may be in arrears. [The
Date of Issuance as defined above was April 30, 1969.]
2. In the event of the voluntary or involuntary liquidation,
dissolution or winding-up of the corporation, the holders of Series A Stock
shall be entitled before any distribution or payment is made to the holders
of Common Stock, to receive for each share thereof $21.74, together with
unpaid dividends thereon (whether or not earned or declared) accrued to the
date when such payments shall be made available to the holders of the
Series A Stock. The holders of Series A Stock shall be entitled to no
further participation in any such distribution. If, upon any such
dissolution, liquidation or winding-up of the corporation, the assets
distributable among the holders of Series A Stock shall be insufficient to
permit the payment in full to such holders of the aforesaid preferential
amounts, then the entire assets of
2
<PAGE> 3
the corporation shall be distributed among the holders of Series A Stock
then outstanding ratably in proportion to the full preferential amounts to
which they shall be respectively entitled. Until the payment in full to the
holders of the Series A Stock of the aforesaid preferential amount, or
until the deposit of moneys or other assets sufficient for such payment, to
the account of such holders, with a bank or trust company doing business in
the Borough of Manhattan, City and State of New York, so as to be and
continue to be available for payment to such holders, no distribution shall
be made upon any such liquidation, dissolution or winding-up of the
corporation to the holders of Common Stock. The consolidation or merger of
the corporation with or into any other corporation shall not be regarded as
a liquidation, dissolution or winding-up of the corporation within the
meaning of this paragraph 2, but no such consolidation or merger shall in
any way impair the rights or preferences of Series A Stock herein set
forth.
3. (a) On or after the fifth anniversary of the Date of Issuance, the
corporation at its option, at any time, or from time to time, may redeem
the whole or any part of the Series A Stock at $21.74 per share (such
amount being referred to as the Redemption Value), together with the amount
of any dividends accrued and unpaid thereon to the date of redemption.
(b) In connection with any redemption of not less than the entire
issue of the Series A Stock then outstanding, the Board of Directors shall
determine the shares of Series A Stock so to be redeemed in any manner it
may deem appropriate; and the certificate of the Secretary of the
corporation (filed with the Transfer Agent or Agents, if any, for the
Series A Stock) of such determination by the Board of Directors shall be
conclusive.
(c) Notice of any proposed redemption of Series A Stock shall be given
by the corporation by mailing a copy of such notice no less than 30 days
prior to the date fixed for such redemption to the holders of record of the
Series A Stock to be redeemed at their respective addresses appearing on
the books of the corporation, and the time of mailing such notice shall be
deemed to be the time of delivery thereof.
(d) From and after the date fixed in such notice as the date of
redemption (unless default be made by the corporation in providing moneys
for the payment of the redemption price), all dividends upon the Series A
Stock thereby called for redemption shall cease to accrue, and all rights
of the holders thereof as stockholders of the corporation (except the right
to receive payment of said redemption price and accrued and unpaid
dividends to the date of redemption) shall cease and determine; or, if the
corporation shall so elect, from and after the date (which date shall be
the date of redemption or prior thereto) on which the corporation shall
deposit, and make immediately available to the holders of Series A Stock,
with a bank or trust company doing business in the Borough of Manhattan,
City and State of New York, as Paying Agent, moneys sufficient in amount to
pay at the office of such Paying Agent, on the redemption date, the said
redemption price, together with accrued and unpaid dividends to the date of
redemption (provided the notice of redemption shall state the name and
address of such Paying Agent and the intention of the corporation to
deposit, and the immediate availability of said moneys on or before the
date of redemption with such Paying Agent), all dividends on such Series A
Stock so called for redemption shall cease to accrue, and all rights of the
holders thereof as stockholders of the Company (except the right to receive
from said Paying Agent said redemption price and accrued and unpaid
dividends to the date of redemption, and the right prior to the date of
redemption to convert or exchange shares thereof for shares of Common
Stock) shall thereupon cease and determine, and by the deposit of said
moneys with said Paying Agent said Series A Stock so called for redemption
shall be redeemed.
(e) Any moneys so deposited with said Paying Agent which shall remain
unclaimed by the holders of Series A Stock so called for redemption at the
end of ten full calendar years after the redemption date, shall be paid by
said Paying Agent to the corporation, and thereafter the holders of Series
A Stock called for redemption shall look only to the corporation for
payment. Any moneys so deposited with said Paying Agent which shall not be
required for such redemption by reason of the subsequent exercise of any
right of conversion or otherwise shall be forthwith returned to the
corporation. Any interest accrued on any moneys so deposited shall be the
property of the corporation.
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(f) In case less than all the shares represented by any certificate
are redeemed, a new certificate, representing the unredeemed shares, shall
be issued to the holder thereof without cost (except for the payment of any
applicable transfer taxes) to such holder.
4. (a) Shares of Series A Stock may be converted at any time, at the
option of the holder thereof, in the manner hereinafter provided into
fully-paid and non-assessable shares of Common Stock; provided, however,
that as to any share of Series A Stock which shall have been called for
redemption, the right of conversion shall terminate at the close of
business on the date fixed for the redemption.
(b) Shares of Series A Stock may be converted into full shares of
Common Stock at the rate of one share of Common Stock for each share of
Series A Stock surrendered for conversion, subject to adjustment as
hereinafter provided.
(1) If at any time after the Date of Issuance there shall be issued
or sold any Common Stock (other than upon exercise of Rights or upon
conversion of Convertible Securities, as such terms are defined in
clauses (2) and (3) of this subparagraph (b)) for a consideration per
share less than 85% of the Current Market Price (as defined in clause
(6) of subparagraph (c) of this paragraph 4) in effect at the time such
offer is made, then, forthwith upon such issuance or sale, the
conversion rate shall be adjusted in accordance with the following
formula:
The number of shares of Common Stock into which each share
of Series A Stock was convertible immediately prior to such
issuance or sale shall be multiplied by a fraction, of which the
numerator shall be the number of shares of Common Stock
outstanding immediately after such issuance or sale, and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the
number of shares which the aggregate consideration received by
the corporation for the total number of shares so issued or sold
would purchase at the Current Market Price (as defined in clause
(6) of subparagraph (c) of this paragraph 4).
(2) If at any time after the Date of Issuance the corporation shall
grant, issue or sell any rights, warrants or options to purchase Common
Stock (other than rights, warrants or options granted, issued or sold
initially to the holders of Common Stock and expiring within 45 days
after the date of grant) or any stock or other securities convertible
into or exchangeable for Common Stock (such rights, warrants or options,
other than those excluded above, being herein called "Rights", and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the minimum price per share for which
Common Stock is issuable upon exercise of such Rights and upon
conversion of any such Convertible Securities (determined by dividing
(m) the total amount, if any, received or receivable by the corporation
as consideration for the grant, issue or sale of such Rights, plus the
minimum aggregate amount of additional consideration payable to the
corporation upon the exercise of such Rights, plus, in the case of such
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange thereof,
by (n) the total maximum number of shares of Common Stock issuable upon
the exercise of such Rights or upon the conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the
exercise of such Rights) shall be less than the Current Market Price in
effect at the time of the granting of such Rights, then the total
maximum number of shares of Common Stock issuable upon the exercise of
such Rights or upon conversion or exchange of the total maximum amount
of such Convertible Securities issuable upon the exercise of such Rights
shall (as of the date of grant, issue or sale of such Rights) be deemed,
for the purpose of clause (1) of this subparagraph (b), to be
outstanding and to have been granted, issued or sold for said price per
share as so determined; provided that no further adjustment of the
conversion rate shall be made upon the actual issue or sale of such
Common Stock or of such Convertible Securities upon exercise of such
Rights or upon the actual issue or sale of such Common Stock upon
conversion or exchange of such Convertible Securities; and further
provided that upon the expiration, termination or lapse of any of such
Rights, if any thereof shall not have been exercised, and upon the
termination of the right to convert or to exchange any of such
Convertible Securities into or for Common Stock, (x)
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the number of shares of Common Stock deemed to be issued and outstanding
by reason of the fact that they were issuable upon the exercise of any
such Rights which were not exercised or upon conversion or exchange of
any such Convertible Securities which were not so converted or
exchanged, shall no longer be deemed to be issued and outstanding, and
(y) the conversion rate shall forthwith be readjusted and thereafter the
conversion rate shall be the rate which it would have been had
adjustment been made on the basis of the issue only of the shares of
Common Stock or of the Convertible Securities actually issued or then
issuable upon the exercise of such Rights.
(3) If at any time after the Date of Issuance the corporation shall
issue or sell any Convertible Securities (other than upon the exercise
of Rights) and the minimum price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (m)
the total amount received or receivable by the corporation as
consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any,
payable to the corporation upon the conversion or exchange thereof, by
(n) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less
than the Current Market Price in effect at the time of such issue or
sale, then the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall (as
of the date of the issue or sale of such Convertible Securities) be
deemed, for the purpose of clause (1) of this subparagraph (b), to be
outstanding and to have been issued or sold for said price per share as
so determined; provided that no further adjustment of the conversion
rate shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities; and further
provided that upon the termination of the right to convert or to
exchange any of such Convertible Securities into or for Common Stock (x)
the number of shares of Common Stock deemed to be issued and outstanding
by reason of the fact that they were issuable upon conversion or
exchange of any such Convertible Securities which were not so converted
or exchanged shall no longer be deemed to be issued and outstanding, and
(y) the conversion rate shall be forthwith readjusted and thereafter the
conversion rate shall be the rate which it would have been had
adjustment been made on the basis of the issue only of the number of
shares of Common Stock actually issued or then issuable upon conversion
or exchange of such Convertible Securities.
(4) No adjustment in the conversion rate shall be required unless
such adjustment would require a change of at least 1% in the number of
shares of Common Stock issuable upon conversion of a given number of
shares of Series A Stock; provided that any adjustments which by reason
of this clause (4) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
(5) In case at any time shares of Common Stock outstanding shall be
combined into a lesser number of shares, whether by reclassification,
recapitalization or otherwise, then the conversion rate shall be
proportionately adjusted. In case at any time shares of Common Stock
shall be issued as a dividend on the Common Stock or in case the shares
of Common Stock at any time outstanding shall be subdivided, by
reclassification, recapitalization or otherwise, into a greater number
of shares, without receipt by the corporation of any consideration (or
with receipt of consideration which is nominal in amount), then the
conversion rate shall be proportionately adjusted.
(6) In case of any capital reorganization of the corporation, any
reclassification or change of outstanding shares of Common Stock of the
class issuable upon conversion of the shares of Series A Stock, or in
case of any consolidation or merger of the corporation with or into
another corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
corporation, the holder of each share of Series A Stock then outstanding
shall have the right thereafter, so long as his conversion right
hereunder shall exist, to convert such share into the kind and amount of
shares of stock and other securities and property which he would have
held immediately after such reclassification, change, consolidation,
merger, sale, conveyance or distribution if such share of Series A Stock
had been converted immediately prior to such reclassification, change,
consolidation, merger, sale, conveyance or distribution; and effective
provision shall be made
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in the certificate of incorporation of the resulting or surviving
corporation or otherwise, so that the provisions set forth herein for
the protection of the conversion rights of the Series A Stock shall
thereafter be applicable, as nearly as reasonably may be, to any such
other shares of stock and other securities and property deliverable upon
conversion of the Series A Stock remaining outstanding or other
convertible preferred stock received by the holders in place thereof;
and any resulting or surviving corporation shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege,
such shares, securities or property as the holders of the Series A Stock
remaining outstanding, or other convertible preferred stock received by
the holders in place thereof, shall be entitled to receive pursuant to
the provisions hereof, and to make provisions for the protection of the
conversion right as above provided. In case securities or property other
than Common Stock, shall be issuable or deliverable upon conversion as
aforesaid, then all reference in this paragraph 4 shall be deemed to
apply, so far as appropriate and as nearly as may be, to such other
securities or property.
(7) In case the corporation shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (i)
to receive a dividend or a distribution payable in Common Stock,
Convertible Securities or Rights or (ii) to purchase Common Stock,
Convertible Securities or Rights, then such record date shall be deemed
to be the date of the issue or sale of the Common Stock issued or sold
or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the
granting of such rights of purchase, as the case may be.
(8) If in any case a state of fact occurs wherein in the sole
opinion of the Board of Directors the other provisions of this paragraph
4 are not strictly applicable, or if strictly applicable would not
fairly protect the conversion rights of the Series A Stock in accordance
with the essential intent and principles of such provisions, then the
Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so
as to protect such conversion rights as aforesaid.
(c) For the purpose of each computation to be made as provided in the
foregoing subparagraph (b) the following provisions shall be applicable:
(1) In case of a consideration in whole or in part other than cash,
the amount of the consideration other than cash shall be deemed to be
the value of such consideration as determined by the Board of Directors.
(2) In case of the issue of shares of Common Stock or Convertible
Securities or Rights in payment or satisfaction of any dividend on any
class of stock of the Company ranking prior to the Common Stock as to
dividends, the amount of the consideration received by the corporation
therefor shall be deemed to be the amount of the obligation in respect
of dividends that shall be discharged by the issuance thereof.
(3) In case the shares of Common Stock at any time outstanding
shall be subdivided, by reclassification, recapitalization or otherwise,
into a greater number of shares without the actual receipt by the
corporation of any consideration for the additional number of shares so
issued, the number of such shares as so subdivided in excess of the
number of shares of Common Stock outstanding prior to the subdivision
thereof shall be deemed to be additional shares of Common Stock issued
for no consideration.
(4) The consideration received or deemed to be received by the
corporation for any Common Stock, Convertible Securities or Rights
issued by it for cash shall be the gross sales price thereof, before
deducting therefrom any expenses incurred or any underwriting
commissions or concessions paid or allowed by the corporation in
connection therewith.
(5) The shares of Common Stock, Convertible Securities or Rights at
any time outstanding shall include any then owned or held by or for the
account of the corporation but not retired or cancelled in any manner
permitted by law.
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(6) For purposes of this paragraph 4, the current market price of a
share of Common Stock on any day (the "Current Market Price") shall be
deemed to be the average closing price per share of the Common Stock on
the ten business days immediately preceding the day in question. The
Closing price per share of Common Stock for any day shall be the last
reported sales price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the American Stock Exchange, or,
if the shares of Common Stock are not listed or admitted to trading on
such Exchange, on the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading as
determined by the corporation, which determination shall be conclusive,
or, if not listed or admitted to trading on any national securities
exchange, the mean between the average bid and asked prices per share of
Common Stock in the over-the-counter market as furnished by any member
of the National Association of Securities Dealers selected from time to
time by the corporation for the purpose.
(d) Any conversion rate determined or adjusted as herein provided
shall remain in effect until further adjustment as required herein. Upon
each adjustment of the conversion rate, the corporation at its expense
shall cause the independent certified public accountants who regularly
audit the books and accounts of the corporation, or other independent
certified public accountants of recognized standing selected by the
corporation, to compute such adjustment in accordance with the terms hereof
and prepare a certificate setting forth such adjustment and showing in
detail any facts upon which such adjustment is based, including a statement
of (i) the number of shares of Common Stock outstanding or deemed to be
outstanding, (ii) the consideration received or to be received by the
corporation for each outstanding share issued or sold (or deemed to have
been issued or sold) after the Date of Issuance and (iii) the conversion
rate in effect at the time each such outstanding share was (or was deemed
to have been) issued or sold, and such certificate, together with a written
instrument signed by an officer of the corporation setting forth the
resolutions, if any, of the Board of Directors passed in connection with
such adjustment, shall forthwith be filed with the Transfer Agent or
Agents, if any, for the Series A Stock, and any adjustment so evidenced,
made in good faith, shall be binding upon all stockholders and upon the
corporation. Upon any conversion, fractional shares shall not be issued,
but any fractions shall be adjusted in cash on the basis of the Current
Market Price unless the Board of Directors shall determine to adjust them
in some other manner permitted by law. Upon any conversion, no adjustment
shall be made for dividends on the Series A Stock surrendered for
conversion (except insofar as the record date or record dates for any such
dividends shall have preceded the conversion) or on the Common Stock
delivered upon such conversion. The corporation shall pay all issue taxes,
if any, incurred in respect of the issue of the Common Stock on conversion,
provided, however, that the corporation shall not be required to pay any
transfer or other taxes incurred by reason of the issuance of such Common
Stock in names other than those in which the Series A Stock surrendered for
conversion was registered.
(e) Any conversion of Series A Stock into shares of Common Stock shall
be made by the surrender to the corporation, at the office of any Transfer
Agent for the Series A Stock (or at the principal office of the corporation
in the State of New York if there shall be no such Transfer Agent), of the
certificate or certificates representing the Series A Stock to be
converted, duly endorsed or assigned (unless such endorsement or assignment
be waived by the corporation), together with a written request for
conversion, and such conversion shall be deemed to have occurred
immediately prior to the close of business on the date of such surrender.
(f) Such number of shares of Common Stock as may be necessary to
provide for the conversion of all outstanding Series A Stock upon the basis
herein provided are hereby reserved for such conversion, subject to the
provisions of clause (6) of subparagraph (b) of this paragraph. If the
corporation shall propose to issue any securities or to make any change in
its capital structure which would change the number of shares of Common
Stock into which the Series A Stock shall be convertible as herein
provided, the corporation shall at the same time also make proper provision
so that thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved for conversion of the outstanding Series A
Stock on the new basis.
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5. Each holder of Series A Stock shall be entitled as such holder to
one vote for each such share held. Except as otherwise herein or by law
provided, the Series A Stock, such other series of Preferred Stock as the
Board of Directors shall designate, and the Common Stock shall vote
together as one class.
6. The holders of Series A Stock shall have no pre-emptive rights and
shall have no pro rata preferential right to subscribe to any increase of
or additional capital stock of any class, including without limitation
Series A Stock, any other series of Preferred Stock and Common Stock.
There is established as a series of the Preferred Stock a series designated
"Series B Junior Participating Preferred Stock" (hereinafter called "Series B
Preferred Stock"). The terms, limitations and relative rights and preferences of
the Series B Preferred Stock shall be as follows:
1. Amount of Designation. The number of shares constituting the
Series B Preferred Stock shall be 80,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series B Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the corporation convertible into Series B Preferred
Stock.
2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock of the corporation (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series B Preferred Stock
with respect to dividends, the holders of shares of Series B Preferred
Stock, in preference to the holders of Common Stock, par value $.01 per
share of the corporation (the "Common Stock") and of any other stock of the
corporation ranking junior to the Series B Preferred Stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in
cash on the last day of January, April, July, and October in each year
(each such date being referred to herein as a "Dividend Payment Date"),
commencing on the first Dividend Payment Date after the first issuance of a
share or fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 1000 times
the aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common
Stock, declared on the Common Stock since the immediately preceding
Dividend Payment Date or, with respect to the first Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series B
Preferred Stock. In the event the corporation shall at any time after
January 30, 1997, declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Dividend Payment Date and
the next subsequent Dividend Payment Date, a dividend of $1 per share on
the Series B Preferred Stock shall nevertheless be payable, when, as and if
declared, on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series B Preferred Stock from
the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first
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Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of
issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series B Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders
of shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series B Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters upon which the holders of the
Common Stock of the corporation are entitled to vote. In the event the
corporation shall at any time after January 30, 1997, declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number votes per share
to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided in the Certificate of Incorporation
or in any amendment creating a series of Preferred Stock or any similar
stock, and except as otherwise required by law, the holders of shares of
Series B Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of
shareholders of the corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series B
Preferred Stock outstanding shall not have been paid in full, the
corporation shall not:
(i) Declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (as to dividends) to the Series B
Preferred Stock;
(ii) Declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (as to dividends) with the
Series B Preferred Stock, except dividends paid ratably on the Series B
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) Redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding-up) to the Series B Preferred Stock,
provided that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding-up) to the Series B Preferred Stock
or rights, warrants or options to acquire such junior stock;
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(iv) Redeem or purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding-up) with the Series B Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(B) The corporation shall not permit any subsidiary of the corporation
to purchase or otherwise acquire for consideration any shares of stock of
the corporation unless the corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof.
6. Liquidation, Dissolution or Winding-Up. Upon any liquidation,
dissolution or winding-up of the corporation, no distribution shall be made
(A) to the holders of the Common Stock or of shares of any other stock of
the corporation ranking junior, upon liquidation, dissolution or
winding-up, to the Series B Preferred Stock unless, prior thereto, the
holders of shares of Series B Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of
such payment, provided that the holders of shares of Series B Preferred
Stock shall be entitled to receive an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth, equal to 1000 times
the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding-up with the Series B Preferred
Stock, except distributions made ratably on the Series B Preferred Stock
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution
or winding-up. In the event the corporation shall at any time after January
30, 1997 declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series B Preferred Stock
were entitled immediately prior to such event under the proviso in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
7. Consolidation, Merger, etc. In case the corporation shall enter
into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series B Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to
1000 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which
each share of Common Stock is converted, exchanged or converted. In the
event the corporation shall at any time after January 30, 1997 declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the conversion, exchange or change of
shares of Series B Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
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8. No Redemption. The shares of Series B Preferred Stock shall not
be redeemable from any holder.
9. Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding-up of the Corporation, junior to all other series of
Preferred Stock and senior to the Common Stock.
10. Amendment. If any proposed amendment to the Certificate of
Incorporation would alter, change or repeal any of the preferences, powers
or special rights given to the Series B Preferred Stock so as to affect the
Series B Preferred Stock adversely, then the holders of the Series B
Preferred Stock shall be entitled to vote separately as a class upon such
amendment, and the affirmative vote of two-thirds of the outstanding shares
of the Series B Preferred Stock, voting separately as a class, shall be
necessary for the adoption thereof, in addition to such other vote as may
be required by the Business Corporation Law of the State of New York.
FIFTH: No holder of any of the shares of any class of the corporation
shall be entitled as of right to subscribe for, purchase, or otherwise acquire
any shares of any class of the corporation or any securities convertible into or
carrying rights or options which the corporation proposes to grant for the
purchase of shares of any class of the corporation or for the purchase of any
shares or other securities of the corporation which are convertible into or
exchangeable for, or which carry any rights to subscribe for, purchase, or
otherwise acquire, shares of any class of the corporation; and any and all of
such shares or other securities of the corporation, whether now or hereafter
authorized or created, may be issued or transferred if the same have been
reacquired and have treasury status, and any and all of such rights and options
may be granted by the Board of Directors to such persons, firms, corporations
and associations, and for such lawful consideration, and on such terms, as the
Board of Directors in its discretion may determine, without first offering the
same, or any thereof, to any said holder.
SIXTH: The Secretary of State is designated as the agent of the
corporation upon whom process against the corporation may be served. The post
office address within the State of New York to which the Secretary of State
shall mail a copy of any process against the corporation served upon him is:
Bowne & Co., Inc.
345 Hudson Street
New York, New York 10014
Attention: Corporate Secretary
SEVENTH: The directors elected by the holders of Common Stock shall be
divided into three classes, namely Classes I, II and III. Each class shall be as
nearly equal in number as possible, and no class shall include fewer than three
directors. The term of office of the Class I directors elected at the 1984
annual meeting of shareholders shall expire at the 1985 annual meeting of
shareholders; the term of office of the Class II directors elected at the 1984
annual meeting of shareholders shall expire at the 1986 annual meeting of
shareholders; and the term of office of the Class III directors elected at the
1984 annual meeting of shareholders shall expire at the 1987 annual meeting of
shareholders. Newly created directorships resulting from an increase in the
number of directors, and vacancies occurring in the Board of Directors for any
other reason, may be filled by the affirmative vote of a majority of the
directors then in office, even though such number may constitute less than a
quorum. A director elected to fill a newly created directorship, and a director
elected to fill a vacancy, shall be elected to hold office until the next annual
meeting of shareholders, and until his successor has been elected and has
qualified. No decrease in the number of directors shall shorten the term of any
incumbent director. Subject to the foregoing, at each annual meeting of
shareholders, commencing with the 1985 annual meeting, the successors to the
class of directors whose term of office shall then expire shall be elected to
hold office for a term that shall expire at the third succeeding annual meeting
of shareholders. Directors elected by the shareholders or the Board of Directors
pursuant to this Article Seventh may not be removed without cause.
Notwithstanding any other provisions of this Certificate of Incorporation, and
in addition to any other vote that may be required by law or this Certificate of
Incorporation, this Article may not be amended, altered, repealed or otherwise
changed unless approved by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of stock of the corporation entitled to
vote thereon.
11
<PAGE> 12
EIGHTH: No director of the corporation shall be personally liable to the
corporation or its stockholders for damages for any breach of duty as a director
unless a judgment or other final adjudication adverse to him establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law, that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled, or that he violated an
express prohibition in Section 719 of the New York Business Corporation Law. If
the Business Corporation Law is amended after adoption of this Article so as to
increase or decrease the extent to which liability of a director may be limited
or eliminated, this Article shall be construed so as to limit or eliminate such
liability to the fullest extent permitted thereafter. This Article shall not
relieve a director of liability for any act or omission occurring prior to
adoption of this Article, but no modification or repeal of this Article shall
render a director liable for his acts or omissions occurring prior to such
modification or repeal.
NINTH: The Board of Directors shall consist of not fewer than six nor more
than ten directors, as shall be fixed from time to time by resolution adopted by
a majority of the Board of Directors then in office. Notwithstanding any other
provision of this Certificate of Incorporation, and in addition to any other
vote that may be required by this Certificate of Incorporation or by law, this
Article may not be amended, altered, repealed or otherwise changed unless
approved by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of stock of the corporation entitled to vote thereon.
------------------------------------
Fourth: The restatement of the Certificate of Incorporation herein
certified was authorized by the Board of Directors of the corporation on March
27, 1997, incorporating all preceding amendments to the Certificate of
Incorporation of the corporation, the latest of which had been adopted January
30 and filed February 14, 1997.
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained therein have been examined by us and are true and correct.
Dated: March 27, 1997
ROBERT M. JOHNSON
--------------------------------------
ROBERT M. JOHNSON,
Chairman of the Board
and Chief Executive Officer
and
DOUGLAS F. BAUER
--------------------------------------
DOUGLAS F. BAUER,
Corporate Secretary
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at April 30, 1997
(Unaudited) and the Condensed Consolidated Statement of Income for the Six
Months Ended April 30, 1997 (Unaudited) and is qualified in it entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<CASH> 11,653
<SECURITIES> 4,390
<RECEIVABLES> 205,747
<ALLOWANCES> 12,424
<INVENTORY> 51,896
<CURRENT-ASSETS> 273,686
<PP&E> 265,619
<DEPRECIATION> (124,645)
<TOTAL-ASSETS> 480,690
<CURRENT-LIABILITIES> 131,747
<BONDS> 0
0
0
<COMMON> 195
<OTHER-SE> 328,507
<TOTAL-LIABILITY-AND-EQUITY> 480,690
<SALES> 313,453
<TOTAL-REVENUES> 350,045
<CGS> 170,704
<TOTAL-COSTS> 170,704
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,015
<INTEREST-EXPENSE> 472
<INCOME-PRETAX> 74,159
<INCOME-TAX> 31,748
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,411
<EPS-PRIMARY> 2.37
<EPS-DILUTED> 2.37
</TABLE>
